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A New Payment Rule for Core-Selecting Package Auctions

  • Aytek Erdil

    ()

    (Dept of Economics, University of Oxford, Oxford)

  • Paul Klemperer

    ()

    (Dept of Economics, University of Oxford, Oxford)

We propose a new, easy-to-implement, class of payment rules, “Reference Rules,” to make core-selecting package auctions more robust. Small, almost riskless, profitable deviations from “truthful bidding” are often easy for bidders to find under currently-used payment rules. Reference Rules perform better than existing rules on our marginal-incentive-to-deviate criterion, and are as robust as existing rules to large deviations. Other considerations, including fairness and comprehensibility, also support the use of Reference Rules.

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File URL: http://www.nuffield.ox.ac.uk/economics/papers/2009/w11/cspa-23-9-2009.pdf
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Paper provided by Economics Group, Nuffield College, University of Oxford in its series Economics Papers with number 2009-W11.

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Length: 16 pages
Date of creation: 01 Sep 2009
Date of revision:
Handle: RePEc:nuf:econwp:0911
Contact details of provider: Web page: http://www.nuff.ox.ac.uk/economics/

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  1. Robert Day & Peter Cramton, 2008. "Quadratic Core-Selecting Payment Rules for Combinatorial Auctions," Papers of Peter Cramton 08qcspr, University of Maryland, Department of Economics - Peter Cramton, revised 2012.
  2. Robert W. Day & S. Raghavan, 2007. "Fair Payments for Efficient Allocations in Public Sector Combinatorial Auctions," Management Science, INFORMS, vol. 53(9), pages 1389-1406, September.
  3. Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2007. "Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords," American Economic Review, American Economic Association, vol. 97(1), pages 242-259, March.
  4. Lawrence M. Ausubel & Peter Cramton & Paul Milgrom, 2004. "The Clock-Proxy Auction: A Practical Combinatorial Auction Design," Papers of Peter Cramton 04mit5, University of Maryland, Department of Economics - Peter Cramton, revised 2004.
  5. Robert Day & Paul Milgrom, 2008. "Core-selecting package auctions," International Journal of Game Theory, Springer, vol. 36(3), pages 393-407, March.
  6. Paul Milgrom, 2008. "Assignment Messages and Exchanges," Discussion Papers 08-014, Stanford Institute for Economic Policy Research.
  7. Peter Cramton & Yoav Shoham & Richard Steinberg, 2004. "Combinatorial Auctions," Papers of Peter Cramton 04mit, University of Maryland, Department of Economics - Peter Cramton, revised 2004.
  8. Lawrence M. Ausubel & Paul Milgrom, 2002. "Ascending Auctions with Package Bidding," Working Papers 02004, Stanford University, Department of Economics.
  9. Klemperer, Paul, 2009. "The Product-Mix Auction: a New Auction Design for Differentiated Goods," CEPR Discussion Papers 7395, C.E.P.R. Discussion Papers.
  10. Roger B. Myerson & Mark A. Satterthwaite, 1981. "Efficient Mechanisms for Bilateral Trading," Discussion Papers 469S, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  11. Peter Cramton, 2009. "Spectrum Auction Design," Papers of Peter Cramton 09sad, University of Maryland, Department of Economics - Peter Cramton, revised 2012.
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